Channels of distribution
Channels of distribution (also known as “distribution channels”) are businesses or intermediary channels through which a product or service travels before reaching the final customer or client. Wholesalers, distributors, retailers, and internet stores are some of the most common distribution channels today.
Distribution channels can be divided into four categories: Manufacturing, wholesale distribution, retail distribution, and final-paying customers. All of these are represented by one or more types of combinations.
All four channels are included in the first type, which is the longest. For example, in the alcoholic beverage sector, manufacturers typically sell their products to wholesalers, who then sell them to retailers.
The second method does not include wholesalers and instead goes directly to the store. Automobile dealerships are an excellent example of this type of distribution chain. Automobile dealerships will often purchase new automobiles straight from the manufacturer and then directly sell them to paying customers.
The third and final type is one in which the product is delivered directly from the maker to the paying consumer. Apple is one of the most notable examples of this and small B2C companies.
The Importance of Distribution Channels
Distribution channels are a crucial, essential part of a well-executed inventory chain. They cover many ways of reaching out to the end customer. These include retailers, agents, online stores, and the list goes on and on—channels of distribution act as a pipe between your company and the paying audience.
A well-put distribution strategy can allow the company to maximize the product exposure to the target audience. That means that distribution channels could increase your sales and market share in the long run. Channels of distribution can also meet users’ needs by giving better, more diverse responses to their requirements.
Furthermore, distribution channels can employ your audience in promoting and marketing your product for you, providing the company with more accurate and comprehensive market insight. When used right, your distribution channels can increase the value of your investment, cost-wise.
How to Employ Channels of Distribution
As a company in a competitive market, your goal is to make sure that your product is available to your audience.
You can do that with various channels: online stores, retailers, you name it. These will connect you and your audience.
First, you will need to establish business relations with one or more of the said examples or other channels available to you. Then, make sure the chain between you and your consumers is effective in terms of service and cost by choosing the channels that provide the highest ROI. It is worth noting that too many channels can be hard to manage in terms of inventory and logistics and maintain close relationships with the distribution partners along the chain.